In addition to calculating your monthly subsidy on SAVE, this calculator will help you estimate monthly payments on the SAVE repayment plan.
Because the SAVE calculation will change on July 1, 2024, to charge borrowers less for undergraduate loans, it is necessary to separate undergraduate debt from graduate debt. If you have a consolidated loan, please do your best to estimate which portion of the debt is graduate and which portion is undergraduate.
This calculator has been updated to include the 2024 federal poverty level guidelines, so it should be as accurate as possible.
Subsidy Calculator
What is the Purpose of the SAVE Subsidy?
Historically, many borrowers qualified for IDR plans with monthly payments lower than the monthly interest charges on the borrower’s loans.
When this happened, IDR enrollment could mean that the balance grew considerably.
This made it harder for IDR borrowers to repay their debt, and it created the possibility of a larger tax bill if the debt was forgiven.
With the SAVE subsidy, borrowers don’t have to worry about their balances increasing.
How is the SAVE Subsidy Calculated?
This calculator works by first calculating an estimated SAVE payment and then comparing it to the expected monthly interest charges for the loans.
To understand the basics of the SAVE subsidy, check out this article that explains how it works.
Maximizing the Benefit
If you qualify for the subsidy, the Department of Education suggests making extra payments to attack the principal balance. I think many borrowers would be better off using a different strategy.
Additionally, borrowers who find ways to shelter income from IDR payments can increase their subsidy even further. My favorite strategy is to set money aside in a retirement account.
Hello,
Question, during the pause – what happened to the total years of repayment? Did they just pause that too?
What’s you opinion on someone with $190k loans, been on IBR since 2017 (out of school since 2010). AGI $83k, 3 dependants – filing status married, but separated. So when applying I sent pay stubs for verification of only my income…
My thing is – I will obviously pay the whole 25 years, so do I worry about the balance (subsidy)? I don’t want to lose the IBR because you can’t go back after July. But I don’t want to miss this great SAVE if it will benefit me.
Hi Michelle,
You first questions are the easy ones: the time during the payment pause will count toward IDR forgiveness.
Additionally, some of your time from before you were on IBR may also potentially count toward that 25 years required, thanks to a progress update scheduled to take place this year.
Your last question is a bit harder to answer as it’s hard to say for certain without knowing more information. However, I will say, there is a very real possiblity that you will be much better off on SAVE. It will lower your monthly payments, and that subsidy will keep your balance from growing which is huge if the forgiveness is eventually taxed or you get a big raise and it makes sense to pay off the balance in full.
One last quick heads up, based on when you finished school and your loan balance, you may have FFEL loans. If you do, odds are pretty good that you will want to do a direct consolidation before April 30 due to the IDR adjustment deadline.
Do you generally recommend those with high balances file taxes separately if married for the loan repay benefits? We have been filing jointly but at the single rate. Thank you.
It is really hard to say what the “general” recommendation is because each situation is different. Do you both have student loans? Do You have kids? Will filing separately cause you to miss out on any tax breaks?
I’d suggest looking at the different considerations that go into deciding whether to file jointly or separately. I know it might seem complicated at first, but if you read the article that I linked to, the best route will hopefully stand out.
Also, if you both have student loans, this article tackles the tax status question for couples who are both on IDR plans like SAVE.
Feel free to reach out again if those two articles don’t answer your questions.
When I go to Consolidate my loans and choose the SAVE option instead of IBR, it shows the 20 years starting from today instead of 2011 when my loans went into repayment. Is that correct? Will all of my payment years be negated?
Many of the federal tools mistakenly assume that borrowers will be starting repayment for the first time when they enroll in an IDR plan. You will still keep your years of progress toward student loan forgiveness.
One more question– once I am on SAVE, my balance won’t grow any more? It started at $118,000 and is now at $180,000. I want to be clear to best save for that TAX bomb?
Correct. As long as you are on SAVE and making the minimum required payments your balance will not grow due to the subsidy.
This makes SAVE a great option for the tax bomb. I’m still hopeful that the tax bomb never happens, but I have a backup plan in place in case I do get hit with a large tax bill.
This is huge! Looking at a Tax bomb on 180k vs 300+K is amazing news!
Bingo! Even if you plan on getting forgiveness, the SAVE subsidy is a game changer.
Wow Mike! This is extremely helpful. Right now I have a balance of $180,000 with 7.65% interest. My AGI is about $86,000. Right now I pay $440 on PAYE. When I called to look into SAVE they asked for both me and my husbands income- and said my payments would increase to $720. This year we plan to file separately.
Is there anyway I can get this lower payment BEFORE July 1,2024?
One option would be to file your taxes as soon as possible in 2024. Once you have filed seperately, you can get a SAVE payment based only on your income.
You’re the best. Thank you!